2014 was a year of divergence in the global economy: US economic growth accelerated, while growth in many other countries slowed or (especially in Europe) remained stagnant. Largely as a result of this trend, the US dollar increased in value against the world’s other major currencies. The implication for financial markets was a good year for US stocks and US bonds, a weak year for international stocks and international bonds, and a terrible year for commodities.

The third quarter of 2014 was full of geopolitical turmoil: Russia’s proxy war with Ukraine, renewed US military involvement in the Middle East, and Scotland’s independence referendum were among the notable events that took place. In the investment world, this mayhem translated into weak stock markets and a rising US dollar relative to most other currencies.

The first quarter of 2014 had a few bumps in store for financial markets, yet in the end almost every asset class ended up with positive returns. Bonds performed well as interest rates declined and the US inflation rate remained below the Federal Reserve’s 2% target. US stocks recovered from January jitters to end the quarter in positive territory. Even emerging market stocks, buffeted by fears of financial instability in countries such as Turkey, Russia’s military adventurism in Ukraine, and weak economic data from China, finished the quarter only slightly down.